Financial Independence Progress Report for April 2018

April is usually a dull month, post March dividends. But, this time, I did a rework of my portfolio to cash out profits from my equity funds and move them to MUNI funds. Dividends for rest of the year and going to look totally different than prior years. So, excited to see how the changes work out rest of this year. Let us see how the numbers look for April 2018.

5/03/2018
Emergency Fund 83.33% 20.83%
College Fund ($80K) 64.54% 65.61%
Passive Income (2017 vs 2018) $450.13(4/2017) $911.81 (4/2018)..cheating!
Retirement Fund 82.79% 78.08%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 9.77% 9.77%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • My passive Income for April 2018 is 100% higher than April 2017 🙂
      • I know I know….this is cheating a bit.I sold funds which distribute dividends quarterly and bought funds which distribute dividends monthly. Details below.
      • The June, September and December dividends are going to be much less. The total dividends for the entire year should be the same OR slightly higher though.
  • Additional Investments
    • Investments in taxable accounts
      • I sold some more stocks…primarily international funds, captured the gains and moved the money into my MUNI funds. Why?
        • Tax equivalent yield for MUNI funds are close to 4%
        • VTMGX and VEMAX yield is roughly 2.5 to 2.75% and I get taxed on top of that. It is possible that VTMGX and VEMAX might add some capital gains….but I am okay with this risk.
        • When the prices drop later this year, I will invest back into these funds…lets cross that bridge when we get there.
      • In addition, I took a bunch of money from my house down payment fund and deployed them as well….a house purchase does not seem to be on cards this  year….so, why let the money sit idle?
      • I also took a bunch of money from my emergency fund and invested them as well. If I need money, I would have to sell some bond funds….hopefully the funds do not lose too much value in case such a case comes….touch wood to avoid taking such a loss.
    • Investments in tax-deferred account (IRA)
      • In the last few months, I have taken some profits and set up a a cash fund to take advantage of the next investing opportunity. Unlike 2008, I want to have a cash fund ready to take advantage of lower asset prices in the next bear market!!
      • I bought some VEIPX (Vanguard Equity Income Fund).
        • Every fund in my tax-advantage portion is earning money for me: stocks and bonds and REIT funds. The stocks are primarily International funds.
        • I am slowly going to dollar cost average into US equities using VEIPX with the cash fund I have developed over the last few months.
        • Basic strategy is that I can get access to entire vanguard funds inside my IRA. A generic total market fund is easy to get from any 401K provider….so, I will add more US equities via my 401k using a total market fund.

Financial Independence Progress Report for December 2017

December is here and time to party 🙂 My best wishes for a wonderful holiday season! Hope everyone is geared up for a relaxing holiday break. My break starts this weekend and I am looking forward to a couple days off from the rat race.

December is the second highest dividend producing month of the year for me…..June takes the crown for the most dividend producing month. But, add the dividends to the good feelings of Christmas holidays and it sweetens the pot a bit in favor of December. So, I like December more than June 🙂

It is also a time of introspection regarding the goals set at the beginning of the year. But, yearly review is for another post. For now, lets look at how the numbers look for December 2017. Bit early in the month, but most of the dividends are in….

12/22/2017
Emergency Fund $60K Done
College Fund (80K) 61.36% 62.50%
Passive Income (2016 vs 2017) $2007.76 (12/2016) $2098.37 (12/2017)
Retirement Fund 80.86% 81.03%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 6.17% 6.17% (login fails to new provider)
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • My passive Income for December 2017 is approximately $100 higher than December 2016. Not much of an increase, but my total dividends for the year are almost $2000 higher in 2017 compared to 2016. I.e. the dividends are distributed to me differently on 2017 due to some investment changes.
  • Additional Investments
    • Investments int taxable accounts
      • I invested the last of my cash fund into purchasing MUNIs (VCADX and VWIUX). Basically, I emptied my money market funds in a final push for 2017. This will pay dividends in 2018….especially VCADX since it is both federal and state tax free.
    • Investments in tax-deferred account (IRA)
      • I captured some gains in two target date funds in my IRA and moved the money into a money market fund for now. I want to have a cash fund set up to take advantage of the next investing opportunity. But where? See next point.
      • In my IRA, the percentage of International stocks is more than that of US stocks….by a slight margin. The reason for this strategy is that US stocks have extremely high valuations. So, my theme for 2018 is to add to US stocks when their valuations become more reasonable. How will I achieve this?
      • I will pile up on US stocks over time in the following ways:
        • Tax deferred accounts
          • Periodic 401K investments are always dollar cost averaging into US stocks (70% of money goes into US funds)
          • I will use my cash fund that I have accumulated in the last few months (via capturing gains) into mainly US stocks and pick them up at cheaper valuations.
        • Taxable accounts:
          • Dollar Cost average into dividend funds that mainly buy US securities….
            • VHDYX (current dividends),
            • VDADX (dividend growth),
            • VDIGX (bit of both)

Financial Independence Progress Report for November 2017

November is a special month….it is the month before December which is a big dividend month!! Other than that, November is a small dividend month. How do the numbers look for November 2017? Lets dive in.

10/29/2017
Emergency Fund $60K Done
College Fund (80K) 59.62% 61.36%
Passive Income (2016 vs 2017) $404.40 (11/2016) $601.87 (11/2017)
Retirement Fund 79.39% 80.86%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 5.70% 6.17%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • My passive Income for November 2017 is approximately $200 higher than November 2016. This increase surprised me. In comparing my 2017 and 2016 dividends, I found one main reason that accounts for a good chunk of the increase….increased investment in VWIUX (Vanguard Intermediate Term MUNI fund). Of course, some capital increase also has a minor hand in this increase.
  • Additional Investments
    • Investments in tax-deferred account (IRA)
      • From August to October, I have been steadily increasing my investments in International stocks. The cash for these purchases have come from a sale of some funds to capture accumulated capital gains.
      • In November, I continued more of the same and invested in the same funds again and I am done with my international investments
        • VTIAX: Vanguard Total International Stock Fund
        • VIHAX: Vanguard International High Dividend Fund
      • In my IRA, the percentage of International stocks is more than that of US stocks….by a slight margin. The reason for this strategy is that US stocks have extremely high valuations. And the international ones have room to grow still. I will pile up on US stocks over time in the following ways:
        • Periodic 401K investments are always dollar cost averaging into US stocks (70% of money goes into US funds)
        • In the next recession, I will target more cash into mainly US stocks and pick them up at cheaper valuations.

Financial Independence Progress Report for August 2017

August has come and gone and it is time to look at the numbers for August 2017.

09/08/2017
Emergency Fund $60K 85.34% 87.32%
College Fund (80K) 56.83% 57.59%
Passive Income (2016 vs 2017) $391.93(08/2016) $535.78(08/2017)
Retirement Fund 76.87% 77.79%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 4.14% 4.18%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • My passive Income for August 2017 is approximately 36% higher than August of 2016. Past investments in VCADX (CA MUNIs) and VWUIX (National MUNIs are the main reasons for the increase.
    • But, since I re-distributed the sale proceeds to other funds that follow the regular quarterly payout cycle, my total dividends for 2017 year-to-date is higher than that for 2016 at the same time. So. nothing to worry!
  • Additional Investments
    • Captured gains in taxable account and paid off car loan
      • Sold rest of Tax managed Balanced fund (VTMFX) to capture capital gains and add to my cash fund.
    • Paid off our car-loan
      • I did not find any deals worthy of investing among the mutual funds I own….out here in the US and outside. So, instead of keeping it in the bank and/or a money market fund, I repaid the remaining portion of our car loan! Now, every month, I will have some extra savings to be applied for home down payment and/or to replenish the emergency bucket.
    • Investments in tax-deferred account
      • Last month, I sold portions of some funds to capture accumulated capital gains and created a cash fund inside my IRA.
      • I deployed some of the cash in the cash fund to buy two international mutual funds…the US funds have not come down from their super expensive valuations.
        • VTIAX: Vanguard Total International Stock Fund
          • Lower expense ratio
          • Covers the entire international market (large, medium and small caps)
        • VIHAX: Vanguard International High Dividend Fund
          • Higher expense ration
          • Covers a portion of the international market only (mainly large caps)
      • The curious reader may ask: why not just invest everything in the cheaper VTIAX?
        • I am following my old rule of risk diversification….in the same class of mutual funds (international market), I always have two funds compete for your money.
      • So, both VTIAX and VIHAX will now compete with each other to make more money for me 🙂
  • Add to the cash fund..details 
    • I started a small cash fund accumulated a couple months back to take advantage of any market dip(s) in the US market. This month, I again captured some gains in a couple of my investments to add to this cash fund. 
    • Now, the waiting game begins for a significant stock dip. What is a big dip? I will wait to employ my cash fund at least until the NAV drops 10% on any of my passive income streams.